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Question
A machine as purchased on 1st October 2012 at a cost of ₹ 3,00,000 and ₹ 20,000 were spent on its installation. The depreciation is written off at 10% p.a. on the Diminishing Value Method. The books are closed on 31st March every year. The machine was sold for ₹ 1,30,000 on 1st July 2015. Show the Machinery Account and Provision for Depreciation Account for all the years.
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Solution
Machinery Account
Dr.
Cr.
Date
Particulars
Amount (Rs)
Date
Particulars
Amount (Rs)
2012
2013
Oct. 01
Bank A/c (3,00,000 + 20,000)
3,20,000
Mar. 31
Balance c/d
3,20,000
3,20,000
3,20,000
2013
2014
Apr. 01
Balance b/d
3,20,000
Mar. 31
Balance c/d
3,20,000
3,20,000
3,20,000
2014
2015
Apr. 01
Balance b/d
3,20,000
Mar. 31
Balance c/d
3,20,000
3,20,000
3,20,000
2015
2015
Apr. 01
Balance b/d
3,20,000
July 01
Provision for Depreciation A/c
79,916
Bank A/c (Sale )
1,30,000
Profit and Loss A/c (Loss on Sale)
1,10,084
3,20,000
3,20,000
Provision for Depreciation Account
Dr.
Cr.
Date
Particulars
Amount (Rs)
Date
Particulars
Amount (Rs)
2013
2013
Mar. 31
Balance c/d
16,000
Mar. 31
Depreciation A/c (for 6 months)
16,000
16,000
16,000
2014
2013
Mar. 31
Balance c/d
46,400
Apr. 01
Balance b/d
16,000
2014
Mar. 31
Depreciation A/c
30,400
46,400
46,400
2015
2014
Mar. 31
Balance c/d
73,760
Apr. 01
Balance b/d
46,400
2015
Mar. 31
Depreciation A/c
27,360
73,760
73,760
2015
2015
July 01
Machinery A/c
79,916
Apr. 01
Balance b/d
73,760
July 01
Depreciation A/c (for 3 months)
6,156
79,916
79,916
Working Note: Calculation of Profit & Loss on Sale
Particulars
Amount
Value of Machinery on Oct. 01, 2012
3,20,000
Less: Depreciation for 6 Months
16,000
Value of Machinery on Apr. 01, 2013
3,04,000
Less: Depreciation
30,400
Value of Machinery on Apr. 01, 2014
2,73,600
Less: Depreciation
27,360
Value of Machinery on Apr. 01, 2015
2,46,240
Less: Depreciation for 3 Months
6,156
Value of Machinery on July 01, 2015
2,40,084
Less: Sale Value
1,30,000
Loss on Sale
1,10,084
| Machinery Account | ||||||
| Dr. | Cr. | |||||
| Date | Particulars | Amount (Rs) | Date | Particulars | Amount (Rs) | |
| 2012 | 2013 | |||||
| Oct. 01 | Bank A/c (3,00,000 + 20,000) | 3,20,000 | Mar. 31 | Balance c/d | 3,20,000 | |
| 3,20,000 | 3,20,000 | |||||
| 2013 | 2014 | |||||
| Apr. 01 | Balance b/d | 3,20,000 | Mar. 31 | Balance c/d | 3,20,000 | |
| 3,20,000 | 3,20,000 | |||||
| 2014 | 2015 | |||||
| Apr. 01 | Balance b/d | 3,20,000 | Mar. 31 | Balance c/d | 3,20,000 | |
| 3,20,000 | 3,20,000 | |||||
| 2015 | 2015 | |||||
| Apr. 01 | Balance b/d | 3,20,000 | July 01 | Provision for Depreciation A/c | 79,916 | |
| Bank A/c (Sale ) | 1,30,000 | |||||
| Profit and Loss A/c (Loss on Sale) | 1,10,084 | |||||
| 3,20,000 | 3,20,000 | |||||
| Provision for Depreciation Account | ||||||
| Dr. | Cr. | |||||
| Date | Particulars | Amount (Rs) | Date | Particulars | Amount (Rs) | |
| 2013 | 2013 | |||||
| Mar. 31 | Balance c/d | 16,000 | Mar. 31 | Depreciation A/c (for 6 months) | 16,000 | |
| 16,000 | 16,000 | |||||
| 2014 | 2013 | |||||
| Mar. 31 | Balance c/d | 46,400 | Apr. 01 | Balance b/d | 16,000 | |
| 2014 | ||||||
| Mar. 31 | Depreciation A/c | 30,400 | ||||
| 46,400 | 46,400 | |||||
| 2015 | 2014 | |||||
| Mar. 31 | Balance c/d | 73,760 | Apr. 01 | Balance b/d | 46,400 | |
| 2015 | ||||||
| Mar. 31 | Depreciation A/c | 27,360 | ||||
| 73,760 | 73,760 | |||||
| 2015 | 2015 | |||||
| July 01 | Machinery A/c | 79,916 | Apr. 01 | Balance b/d | 73,760 | |
| July 01 | Depreciation A/c (for 3 months) | 6,156 | ||||
| 79,916 | 79,916 | |||||
Working Note: Calculation of Profit & Loss on Sale
| Particulars | Amount |
| Value of Machinery on Oct. 01, 2012 | 3,20,000 |
|
Less: Depreciation for 6 Months
|
16,000 |
| Value of Machinery on Apr. 01, 2013 | 3,04,000 |
|
Less: Depreciation
|
30,400 |
| Value of Machinery on Apr. 01, 2014 | 2,73,600 |
|
Less: Depreciation
|
27,360 |
| Value of Machinery on Apr. 01, 2015 | 2,46,240 |
|
Less: Depreciation for 3 Months
|
6,156 |
| Value of Machinery on July 01, 2015 | 2,40,084 |
|
Less: Sale Value
|
1,30,000 |
| Loss on Sale | 1,10,084 |
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